Tracy was a lawyer active in Republican Party politics during the 1850s. He was a member of the New York State Assembly (Tioga Co.) in 1862. During the Civil War, he commanded the 109th New York Infantry Regiment. He was awarded a Medal of Honor for his actions during the Battle of the Wilderness on May 6, 1864. According to the official citation, Tracy "seized the colors and led the regiment when other regiments had retired and then reformed his line and held it."[3] Later that year, he became commandant of the Elmira prisoner of war camp, before being appointed Colonel of the 127th Infantry, U.S. Colored Troops, on August 23, 1864.[4] Tracy was discharged from the volunteer service on June 13, 1865.[5] On January 18, 1867, PresidentAndrew Johnson nominated Tracy for appointment to the brevet grade of brigadier general of volunteers, to rank from March 13, 1865, and the U.S. Senate confirmed the appointment on February 21, 1867.[6]

Tracy was noted for his role in the creation of the "New Navy", a major reform of the service, which had fallen into obsolescence after the Civil War. Like President Harrison, he supported a naval strategy focused more on offense, rather than on coastal defense and commerce raiding. A major ally in this effort was naval theorist Captain Alfred Thayer Mahan, who had served as a professor at the new Naval War College (founded 1884). In 1890, Mahan published his major work, The Influence of Sea Power upon History, 1660–1783—a book that achieved an international readership. Drawing on historical examples, Mahan supported the construction of a "blue-water Navy" that could do battle on the high seas.

Tracy's wife and child perished in a fire at their residence in Washington, DC in 1890.

After leaving the Navy Department, Tracy again took up his legal practice. In 1896, he defended New York City Police Commissioner Andrew Parker against Commission President Theodore Roosevelt's accusations of negligence and incompetence, in a performance that significantly embarrassed Roosevelt. (ref. Edmund Morris, The Rise of Theodore Roosevelt, p. 555) He also helped negotiate a settlement to the boundary dispute between Venezuela and Great Britain which had culminated in the Venezuela Crisis of 1895.

Michael A. Palmer (September 22, 2004). "The Navy: The Oceanic Period, 1890-1945". Naval Historical Center. Retrieved September 29, 2010. (Copyright notice from Naval Historical Center website: "Used by permission of Charles Scribner's Sons, an imprint of Simon & Schuster Macmillan from Encyclopedia of the American Military, John E. Jessup, Editor in Chief. Vol. I, pp. 365-380. Copyright c 1994, Charles Scribner's Sons, 1633 Broadway, New York, NY 10019. [The views expressed in this history are those of the author and do not reflect the official policy or position of the Department of the Navy or the U.S. government.]"